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China and US Face Off in 5G “Splinternet”

October 28, 2019
	Woman using smartphone with 5G, against the skyline of Hong Kong
The world’s two tech superpowers are facing off in a high-stakes battle over 5G. (Photo credit):

The world’s superpowers compete for global dominance of next generation tech.

Get ready for a telecom revolution the world has never seen before, one that’s swiftly moving forward with super-speedy wireless telecom networks and cool, ultra-fast 5G smartphones.

As this transformative technology makes us uber-connected, another scene is playing out. The backdrop of this 5G rollout is a big and prominent battle for global dominance of next-generation tech.

The world’s two tech superpowers—the U.S. and China—are facing off in a high-stakes battle over this important transformation. In the 5G launch that is underway, Chinese telecom giant Huawei, the world’s biggest telecom gear maker, has become a focal point of controversy and debate internationally.

At the heart of the issue is the perceived security risk of using 5G telecom gear from China, specifically from Chinese market leader Huawei. This comes at a time when U.S.-China trade and tech tensions are escalating. The Trump administration has blocked U.S. companies from selling supplies to Huawei, citing security concerns, but has recently allowed some corporate sales of non-sensitive supplies to the Chinese telecom giant. Huawei has denied that it poses a threat.

First mover’s advantage

As 5G becomes mainstream this year and next year in developed markets, and penetrates many emerging markets worldwide over the next few years, countries around the world are choosing which 5G operator to use: Huawei and ZTE from China, Nokia from Finland or Ericsson from Sweden.

In this selection, a divide is coming between the U.S. and its closest allies against China and other parts of the world. Countries that have banned Huawei equipment in their mobile networks are the U.S., Japan, Australia, New Zealand and Taiwan. Meanwhile, Huawei has signed agreements to offer 5G service or trials in many markets in Asia and Europe.

China is racing to get a first-mover advantage in this new technology that has been compared in impact to the invention of the Gutenberg printing press. “5G is where China will try to insert its muscle,” said Andres Carvallo, CEO of consulting company CMG and a telecommunications market expert.

Machine-to-machine market

Game-changing fifth generation telecommunications will turbo-charge connections at a speed that is hard to imagine now. Its biggest impact will be in the machine-to-machine market, said Carvallo, who also is an innovator-in-residence at Texas State University’s STAR (Science, Technology and Advanced Research) Park in San Marcos, Texas. This new, ultra-fast telecom standard will upgrade smart home and smart city devices such as internet-connected street lights, traffic signals, parking meters, refrigerators and door bell ringers. This game changer will also spur development of autonomous vehicles and robotic factories, and it will be integrated into many other industries.

The wins will go to the speediest connections and the first to install 5G across many industries and cutting-edge devices.

The tech world is increasingly becoming fragmented into regions, standards and systems, with 5G as one element. Ultimately, this divisive trend could slow global innovation and raise prices globally. Some experts are already calling this tech divide the “Splinternet.”

5G in China
(Photo credit): L
The tech world is increasingly becoming fragmented into regions, standards and systems, with 5G as one element. Some experts are already calling this tech divide the “Splinternet.”

China, with its top-down directives and government policies to forge ahead in the tech race, could have an advantage in 5G. American companies are using a piecemeal approach to launching 5G, rolling out the service in select cities at a time. In contrast, China is rolling out 5G nationwide this year in 40 cities from three major state-owned carriers: China Mobile, China Unicom and China Telecom.

Soon, 5G smartphones will be everywhere and in wide use. China, the U.S., Japan and Korea are in the lead worldwide. South Korea got a jump in launching its wireless technology with Samsung Galaxy S10 in April 2019, and on the same day, Verizon became the first to launch in the U.S. Chinese, Japanese and other U.S. mobile operators quickly followed within a few months with their own 5G-capable smartphones.

5G gear goes mainstream

Technology market research firm Canalys predicts that 5G phones will outsell the current 4G models in 2023. The global firm further projects that 800 million 5G-capable handsets will be in the market by 2023, comprising slightly more than half of all smartphones shipped and surpassing the older models within five years. As 5G gear goes mainstream over the next five years and as networks upgrade, it doesn’t necessarily mean that current smartphones need to be replaced. Older phones will still work, but they won’t be able to use the new mobile apps that are being developed for 5G connectivity.

This year, as many as seven 5G handsets were introduced by Chinese vendors like Huawei, as well as smartphone-maker Xiaomi and telecom company ZTE. In the U.S., carriers Verizon, AT&T, Sprint and T-Mobile have started limited 5G offerings. In Japan, NTT DoCoMo is launching a trial 5G service.

Huawei’s edge

One advantage China has in this race is that Chinese technology giant Huawei is one of few companies that makes both smartphones and networking gear, noted Michael Davies, chairman of Endeavour Partners in Cambridge, Massachusetts, and an expert on 5G who teaches at the Massachusetts Institute of Technology. Huawei could put together its phones and network equipment in a package deal for developing countries such as in Africa, he added.

Technically, China is on a par with the Western world in 5G development, he continued. But Huawei could get the upper hand in expanding outside China more rapidly by offering both the networking gear and handsets.

China also has leverage in overall 5G spending. China has outspent the U.S. on wireless infrastructure and cell sites by approximately $24 billion since 2015, according to a report on 5G, “The Chance to Lead for a Decade,” by consulting and accounting firm Deloitte. The report pointed out that China plans to invest $400 billion in 5G testing and development over the next five years.

The next phase of this new switched-on, ever-connected world will come as 6G standards arrive, which could be as soon as 2030.

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